Chapter 11, Problem 14QP

Summary Introduction

To determine: The fixed costs

Introduction:

Fixed costs are the costs which remain the same in the total cost despite the changes in the level of activity. However, the fixed cost per unit has a negative relationship with an activity.

This means, if the activity volume increases, then total cost will decrease and if the activity volume decreases, then total cost will increase. Some of the examples of fixed costs are insurance, salaries, rent, and property taxes.